Flash comment: Lithuania - April 10, 2018
Annual inflation decelerates to 2.7% in March
Inflation is steadily continuing its expected path of easing with the base effect of last year’s excise duty hikes dissipating. Annual inflation dropped to 2.7% down from 3.5% in February. In March prices were higher 0.4% compared to February, mainly due to new clothes and footwear collections rolling in. Annual inflation of goods has decelerated to 1.8% while that of services continued steady pace at 5.2%.


Alcohol is no longer the main contributor to price growth. Prices of solid fuels are up 20% in March and contributed 0.33pp to annual inflation. An increase in the tobacco excise duties added another 0.2pp, while restaurants and other catering services contributed additional 0.26pp. On the other hand prices of pharmaceuticals are down nearly 4% in annual terms and removed 0.14pp from inflation.



Price growth will be driven by services

We expect average annual inflation to moderate to 3% this year, which currently stands at 3.9%. There is potential for some further moderation in prices of imported goods due to stronger euro. The growth in prices of services is expected to remain elevated as rapid wage growth is pushing the costs for this sector.

 


For more information about this report, please contact Mr. Vytenis Šimkus, +370 5 258 5163, vytenis.simkus@swedbank.lt

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